AI, Chips, and X-by-Wire Seven Chinese Automotive Start-Ups That Will Shape the Industry

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From Deepseek to SiEngine to Watson Rally: These seven startups provide AI, chips, and digital chassis. BMW, VW, and Audi are also among their customers. An overview.

The transformation of the automotive industry is already entering its third phase. Nevertheless, the first two phases of electrification and digitalization, including autonomous and connected driving, are not yet fully completed. The trigger for the third phase is the use of artificial intelligence, which is fundamentally changing not only how vehicles operate but also how they are developed, built, and networked via the cloud.

"In the next decade, AI will bring about a transformation in the automotive industry that goes far beyond electrification," says He Xiaopeng, the founder of the Chinese electric vehicle start-up Xpeng.

Alongside these technological disruptions, the business models of the automotive industry and all supply chains are also changing. We are introducing a series of start-ups and successful young companies that are currently part of this industrial new beginning in China.

1. Deepseek

• Artificial Intelligence
• Founded: 2023
• Headquarters: Hangzhou

It has been just over a year since Deepseek suddenly became globally famous when it launched a large language model (LLM) named "DeepSeek-R" in early 2025. It is almost as powerful as comparable models from the USA; however, according to the company, training the base model reportedly cost only about $5.6 million—which is considered relatively low in the world of LLMs.

Over the past year, automotive companies have queued up in Hangzhou to establish partnerships with Deepseek. The Geely Group, China's second-largest automaker after BYD, was the first to announce on February 6, 2025, that it had implemented a "deep integration" of its self-developed AI models with Deepseek.

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Among Deepseek's other OEM partners are BMW, Leapmotor, GAC, Dongfeng with several of its automotive brands, and Great Wall Motors. On one hand, it involves interaction with the driver, better context understanding, and similar aspects; on the other hand, it relates to controlling other functions in the vehicles via software interfaces.

"Central advancements in artificial intelligence are taking place here. We are specifically expanding our AI partnerships for integration into our vehicles in China," said Oliver Zipse, CEO of BMW, during the announcement of the partnership between BMW and Deepseek at the Shanghai Auto Show last April.

2. XiZ Technology

• Power Electronics
• Founded: 2022
• Headquarters: Suzhou

With the ongoing trend towards 800-volt architectures in powertrains, there is an increasing demand for SiC and GaN power modules and high-frequency power supply modules, which this start-up from Suzhou, near Shanghai, specializes in developing and producing.

Following a funding round in December 2025 that raised over 250 million yuan (around 30 million euros), the company plans to expand its research and development in the field of automotive power semiconductors of the so-called third generation and WBG modules. The business unit AIDC (Artificial Intelligence Data Center) is also set to be expanded with the new capital.

Liu Bo, the founder of the company, holds a master's degree in energy technology and automation from Zhejiang University. Part of his team previously worked at Delta Electronics for clients such as Nvidia and HP.

The market for power modules in electric drives is currently still heavily dominated in China by international suppliers like Infineon and ON Semiconductor. From a Chinese perspective, this opens up significant growth opportunities for "domestic substitution," meaning the takeover of market shares by local suppliers like XiZ.

3. SiEngine Technology

• System-on-Chip Manufacturer (SoC)
• Founded: 2018
• Headquarters: Wuhan

The start-up rooted in automotive manufacturing in the central Chinese city of Wuhan has achieved "unicorn status" following several funding rounds, meaning a valuation of over one billion US dollars within its first years of existence. It specializes in the development and production of automotive chips for smart cockpits and autonomous driving functions.

SiEngine is currently one of the few Chinese companies capable of producing smart cockpit SoCs on 7-nanometer processes in significant volumes—having done so since 2021.

In December 2025, SiEngine began series production of its new ADAS chip "Xinchen 1." A single chip achieves an NPU processing power of 512 TOPS. When multiple chips are interconnected, they reach 2,048 TOPS.

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The company’s customers include automotive brands such as Volvo, Lynk & Co, FAW Hongqi, Changan, and Volkswagen—according to Chinese media reports, also for VW models sold in Europe and the USA.

The company has greatly benefited from state support since the USA has been trying to slow down the Chinese industry by boycotting high-performance semiconductors. The "China State-owned Enterprise Structural Reform Fund (Phase II)" is one of the early investors in this rapidly growing company.

Public investment funds at the provincial level, state banks, and many enthusiastic private investors have since overwhelmed the company with capital, which it uses for research and development at globally leading levels.

4. Trugo Tech (Qiangpu)

• Chassis-by-Wire
• Founded: 2015
• Headquarters: Shanghai

This successful new company specializes in the digital control of vehicle functions of all kinds, known as X-by-Wire. Its most well-known product is an electronic hydraulic brake system called EHBI-Onebox.

Since its founding, the company has reportedly sold 600 million chassis-by-wire solutions, according to the Chinese automotive portal Gasgoo. About a dozen leading automakers count among its customers.

The founder and CEO Chen Jingjie has stated that he aims to make Trugo Tech the leading Chinese company in this niche. He is already competing with international Tier-1 suppliers that also manufacture such high-tech components for increasingly digitized cars, whether they are electric vehicles, hybrids, or internal combustion engine cars.

5. LEEKR Technology

• Chassis-by-Wire
• Founded: 2021
• Headquarters: Shanghai

As more autonomous driving functions are implemented in the Chinese automotive industry, the demand for completely digital X-by-Wire products is growing. Central processing units can steer the vehicle autonomously best when their digital commands arrive quickly and smoothly—via electrical and electronic impulses, but without mechanical bridges at the endpoint.

LEEKR Technology offers products for digital steering (steer-by-wire), digital braking (brake-by-wire), as well as chassis domain controllers and integrated chassis systems.

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The company is also an example of how quickly Chinese start-ups in the automotive industry seek opportunities for expansion abroad after initial successes in the domestic market.

In December, LEEKR signed a memorandum of understanding for cooperation with the Vietnamese Geleximco Group. In Vietnam, the market for electric vehicles and hybrids is currently growing at annual growth rates of 25 to 30 percent.

6. Watson Rally

• Brake-by-Wire
• Founded: 2022
• Headquarters: Shanghai

Shanghai Watson Rally Automotive Technology Co. develops electromechanical brake-by-wire systems (EMB). The founder and CEO is Cai Xudong. He has recruited a team of specialists from international Tier-1 suppliers.

At the beginning of last year, the start-up received 100 million yuan (approximately 12 million euros) from investors such as Blue Lake Capital, Vinno Capital, and Junke Danmu Investment, as well as industrial investments, including from Xiaomi Strategic Investment.

The start-up benefits, like many others, from the rapid transformation of the Chinese automotive industry. With the electrification and the similarly rapid growth of autonomous driving functions comes a quick digitization of many vehicle components.

7. ZYT

• Assistance Systems
• Founded: 2023
• Headquarters: Shenzhen

Although the roots of this rapidly growing provider of automated driving systems trace back to 2016, it has only existed in its current form since 2023, when it was spun off from the Chinese drone manufacturer DJI.

With its combination of hardware and software for assistance systems (ADAS), "Zhuoyu Technology" supplies an impressive list of OEM partners, including VW, Audi, SAIC-GM-Wuling, Chery, Great Wall Motor, FAW Group, and Dongfeng Motor.

A key factor for the start-up's breakthrough into the growth phase was an investment from the FAW Group, as such stakes from customers usually lead to firm orders and other synergy effects.

At the recent IAA in Munich, the company announced the establishment of a European headquarters in Braunschweig. The company aims to be closer to its customers in the German and European automotive industry with a strategy of "in Europe for Europe." Additionally, it hopes for contracts from Chinese OEMs investing in Europe.